While it’s tempting to jump on a company like Nvidia (NASDAQ:NVDA), at some point, it won’t match expectations, which brings us to a discussion about underappreciated tech stocks. They’re nowhere near as enticing as NVDA. However, they could offer superior returns.
That might sound like an arrogant if not irrational proposition. But the thing is, a company that has already exceeded expectations can only aim higher to enjoy similar praise. On the flipside, the reduced expectations of diamond-in-the-rough tech stocks may facilitate dramatic returns, if only because few expected such an outcome.
Of course, venturing off the beaten path implies heading into unknown and potentially volatile territory. If you’re okay with that, these tech stocks just might surprise you – in a pleasant way.
PLAB stock: Electronic board, pen, processor on the background of schematic circuit diagram and photomask for manufacture of printed circuit boards.
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A semiconductor photomask manufacturer, Photronics (NASDAQ:PLAB) might not receive the spotlight like an artificial intelligence play. However, the production of photomasks is vital to the broader tech ecosystem. That’s because they’re used in photolithography, which ultimately produces patterns on silicon wafers. Therefore, without photomasks, we really wouldn’t have a robust industry of tech stocks.
In the fiscal year ended October 2023, Photronics rang up sales of $892.1 million, up 8.2% against the prior year’s result. Looking ahead, analysts estimate that current year revenue will land at $932.3 million or 4.5% up. And in 2025, sales will finally hit the $1 billion mark. However, these estimates could be understated given the importance of Photronics to the broader semiconductor industry.
Notably, PLAB has quietly printed a robust performance over the past 52 weeks. Currently, D.A. Davidson’s Thomas Diffely is the only expert who covers PLAB stock with a “buy” rating. No price target is specified, although another double-digit percentage move wouldn’t be surprising.
Weave Communications (WEAV)
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An all-in-one customer experience software platform, Weave Communications (NYSE:WEAV) helps automate various tasks. These include easy appointment scheduling and reminders, convenient follow-up protocols and facilitating multiple payment options. In many ways, Weave represents a digital assistance, enabling its operators to focus on the functions that really matter.
Last year, the company posted sales of $170.5 million, easily outpacing the prior year tally of $142.1 million. Notably, since 2019, Weave has consistently expanded the top line. Looking ahead, analysts estimate that the software specialists will ring up sales of $196.29 million. Further, in 2025, sales could reach $225.62 million.
To be fair, WEAV isn’t exactly the most discounted idea among tech stocks. However, for the money, you’re receiving an underappreciated growth machine. Currently, analysts peg shares a moderate buy with a $14.50 average price target. Moreover, the high-side target lands at $18, indicating sizable upside for current speculators.
Himax Technologies (HIMX)
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A fabless semiconductor firm based in Taiwan, Himax Technologies (NASDAQ:HIMX) specializes in display imaging processing technologies. These components are essential for the proper functioning of various electronic devices. Predominantly, the company designs and develops display driver integrated circuits (ICs), which are responsible for image quality and functionality. As well, Himax’s products find themselves integrated in a wide range of products, from TVs to tablets to automotive displays.
Last year, Himax posted sales of $945.4 million, a disappointment from the prior year’s tally of $1.2 billion. Therefore, analysts aren’t exactly enthused about the company’s immediate future. In 2024, they anticipate that revenue will come in at only $901.25 million. In 2025, they only see sales hitting just over $982 million.
Nevertheless, with the importance of display drivers to the broader tech ecosystem, HIMX could be undervalued. Indeed, shares trade hands at 18.55X trailing-year earnings, below the sector median 29.3X.
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Based in San Jose, California, Adeia (NASDAQ:ADEA) is a licensing company. It owns various patents and other intellectual property (IP) related to technologies used in everyday devices. These include TVs, smartphones and other devices. Rather than making these products itself, Adeia licenses out the technologies to other companies, granting them permission to utilize the innovations in their own products and services.
In 2023, the company posted sales of $388.8 million, which was a disappointing tally compared to the $438.9 million posted in the prior year. However, looking ahead, analysts anticipate the beginnings of a recovery. For the current year, sales should land at just over $400 million. By 2025, sales could hit $427.25 million. Not only that, the most optimistic expert sees 2025 sales reaching $441.74 million.
One bonus to consider: ADEA appears deeply undervalued, trading at a forward earnings multiple of 7.99X. Analysts also rate shares a unanimous strong buy with a $15 price target. Therefore, it’s one of the tech stocks to consider.
Payoneer (PAYO)
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A financial technology (fintech) firm, Payoneer (NASDAQ:PAYO) specializes in facilitating cross-border payments for businesses, professionals and freelancers around the world. Specifically, it engages in functions such as global payment solutions, payment management and working capital access. One of the key benefits of using the Payoneer platform is a unified and simplified network, a key advantage for multinational corporations.
On a trailing-12-month basis, the company has posted revenue of $790.3 million. Analysts expect the firm to ring up $828.2 million. Given the increased trajectory in the top line, that seems a doable target. Investors will find out shortly, with earnings scheduled to be released on Feb. 28.
Looking ahead to the current year, the experts believe that Payoneer could post sales of just under $910 million. The combination of the popularity of fintech platforms along with the company’s own financial performances lends credibility to this target.
Lastly, analysts rate shares a unanimous strong buy with a $7.60 price target, projecting nearly 37% growth potential. Thus, it’s one of the hidden-gem tech stocks to consider.
MoneyLion (ML)
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Another fintech specialist, MoneyLion (NYSE:ML) offers a mobile app with multiple features aimed at helping users improve their financial health. To be clear, MoneyLion is not a bank itself; however, it partners with financial institutions to provide certain banking services. Along with offering the ability to file taxes through the platform, users can also qualify for personal loans up to $50,000.
Next week, MoneyLion will release its fourth-quarter earnings report. So far, on a trailing-12-month (TTM) basis, the company posted revenue of $405.4 million. That’s well above 2022’s tally of $340.7 million. Moreover, analysts anticipate that in the current year, sales could fly to $518.5 million. That’s the average consensus. The high-side target soars to $529.1 million.
With rising interest in online banking services, ML could be one of the tech stocks to watch closely. Analysts anticipate big things, pegging shares a unanimous strong buy with a $78.33 average price target. Moreover, the most optimistic target calls for a price of $102.
Lantronix (LTRX)
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If you don’t mind intense volatility, Lantronix (NASDAQ:LTRX) could be one of the tech stocks to consider. Operating within the realms of the Industrial Internet of Things (IIoT) and intelligent information technology (IT), Lantronix offers a wide range of hardware, software and cloud-based solutions. These services help businesses connect, manage and secure their industrial devices and edge computing infrastructure.
Fundamentally, the main catalyst for LTRX centers on the company’s ability to grab a piece of the IIoT pie. Per Grand View Research, this segment reached a valuation of $394 billion in 2023. Further, analysts project that the space could expand at a compound annual growth rate (CAGR) of 23.2% from 2023 to 2030. At the forecast’s culmination point, sector revenue could land at $1.69 trillion.
Of course, there’s no guarantee that LTRX can grab that piece. It’s not terribly surprising to see shares stumble almost 30% since the January opener. Still, analysts want to give it a chance, rating shares a unanimous strong buy with an $8.25 price target.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.
